Why economists disagree?

To understand why often economists do not agree with each other, first we have to know what is the economics, or who are the economists? According to the ancient Greek it means “one who manages and administers all matters relating to a household”. It is natural that human have needs and wants that they want to satisfy, and they do it by physical and non-physical objects. The physical ones are defined by people as goods (food, clothes, houses, etc.), the non-physical by services (education, health care, entertainment). To satisfy human needs and wants we need resources, which unfortunately are scarce. This scarcity leads the economists to making choices on what to produce, how to produce and for whom, also it is very important to avoid resource wasting as much as possible. This is one of the sources of all the conflicts between them. It is important because it is directly related to people and their lives. The other reason is that economics is a social science based on theories rather than hypothesis. Social science means that it deals with human society and behavior, how people organize their activities and what they do to satisfy their needs and wants. Social science’s approach to studying human society is based on the social scientific method.

There are four main aspects of economists’ disagreement. They include the importance of the economic growth and the economic development; how sustainability should be achieved in economics; whether the government intervention is necessary in creating the most efficient market or not; and how equity and efficiency affect each other, and if equity adds any complications.
In further paragraphs you will find the evaluations of those problems that I will try to make.

First of all, the economists deal with the problem of economic growth and economic development. The economic growth, in other words economic output, is when the goods and services produced by consumers increases. The economic development, on the other hand, is mainly focused on raising the standard of living and well-being of people. Also reducing poverty among poor people, trying to make the difference between very rich and very poor become smaller, reducing unemployment and increasing provision of important goods and services. Economists surely agree on what exactly the economic growth and economic development is, so they all distinguish these the same way. Although the main area of disagreement deals with whether the economic growth is more important or the economic development. So the questions are if growth should be a priority, assuming that some development will follow if that growth occurs, or should development objectives be a direct priority? There is a third option that maybe it would be best if they were equal so that we ensure the greatest efficiency in the economy.

Secondly, the economists have to face the problems of the meaning of sustainability from the practical point of view and how it should be achieved in economy. Scientific, environmental, economic, social and institutional conditions are interrelated in a complex way. They are involved in the concept of sustainable resource use, but the problem is that they are not fully understood by all the scientists and social scientists which leads to numerous uncertainties and also cannot be accurately measured given the present state of scientific knowledge. Moreover, there are very important issues of an ethical and philosophical nature that science and social science are not equipped to address.

Furthermore, the questions that economists ask, and struggle with, which also leads to come complications between the, is whether there should be the government’s intervention, and if so, how should it intervene? Markets are able to work on their own so that they produce outcomes that promote society’s well-being. They are also able to achieve reasonably good resource allocations, answering economics’ three basic questions. But when the government intervenes, it changes and worsens the allocation of resources, increasing the resource waste. Although in contrast, in the real world the government intervention is needed to make corrections when the market’s imperfections become important. It is explained that markets, when working on their own, are not able to allocate resources for the best society’s interests. And in this situation the government intervention is needed to help the markets work better and arrive at the point where they reach better pattern of resource allocation and distribution of income and output.

Last but not least, is the problem related to equity and economic efficiency. Equity in other words is the idea of fair and just. We cannot confuse it with equality. In economics it arises in connection with the distribution of income answering the for whom to produce question. The goal is not to make the distribution of income equal among people, but to ensure that people who would have little or no income in a market economy, will somehow be able to survive. Now, economic efficiency is using the resources, avoiding wasting them. It involves the what to produce and how to produce questions by allocating resources in the best possible way to escape from the resource waste. The important aim of the government policies is to increase efficiency in the economy as much as possible, because it leads to the economy producing the most of those goods society mostly prefers. The issue here is that what if the government intervention in markets to achieve equity makes changes in resource allocation, and those changes would affect the economy and make it less efficient? And also what if they disable the economists from answering the what to produce and how to produce questions in the best possible way?

To sum up, those were the four main aspects of the disagreement between all the economists. Quickly revising, those were the economic growth and economic development, its importance in the economy and distinguishing their meanings, sustainability in economics, the necessity of government intervention and the last ones are equity and economic efficiency. Economics is all about making choices, making best out of all resources and trying to avoid wasting them, increasing well-being of people as well as the standards of living. Those economic issues, difficulties probably existed since the beginning, and because the world has experienced the economic development overall, I think the economy will continue to progress in spite of these difficulties.